NH Investment & Securities, a brokerage unit of South Korea’s NongHyup Financial Group, decided Thursday to offer up to 70 percent of funds invested in now-frozen Optimus Asset Management’s funds via the firm.
Stressing its ethical, not legal, responsibility as the seller of the troubled fund, the company said it would pay 30-70 percent of investment funds to retail and corporate investors in advance. The payment is not a sort of compensation, but is designed to provide financial liquidity to investors in fear of losing money, it said. The Seoul-based hedge fund operator is subject for compensation, not NH, it added.
Retail investors with investment funds worth less than 300 million won ($253,000) will receive 70 percent of their investment. Those with less and more than 1 billion won will be paid 50 percent and 40 percent, respectively.
The highest percentage -- 70 percent -- of compensation will be paid to a group of retail and corporate investors who parked less than 300 million won as they composed 77 percent of all investment headed to Optimus. Considering their investment distribution ratio and financial conditions, the amount of prefunded money will be determined, officials said.
The distribution ratio will be also applied the same for corporate investors. But those with the investment funds worth over 1 billion won will be given only 30 percent.
“The latest decision has been made to fulfill a moral responsibility as a seller. We prioritize customers’ trust by preventing our customers from suffering secondary damage and enhancing shareholders’ value as for a long-term (strategy),” a NH Investment official said.
Optimus Asset Management has been under investigation by financial authorities over allegations that it breached contracts with fund investors in its portfolio construction. The hedge fund manager froze 38.4 billion won worth of two feeder funds a day before they reached maturity date in June.
While Optimus was overseeing 535.49 billion won worth of funds as of end-March, 80 percent of the total amount was sold by NH Investment. Previously, authorities have pressured the brokerage firm to return losses inflicted by Optimus.
By Jie Ye-eun (firstname.lastname@example.org